Stocks ring in 2013 with broad rally

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Major equity indexes greeted the New Year with a strong rally, closing at their highs of the day and driving the CBOE Volatility Index back below the 15 level.

The S&P 500 was up 36.23 points or 2.54 percent, to 1462.42. That was its best close since Sept. 14, which was in turn the highest close since the last day of 2007. This level represents substantial resistance that was repeatedly tested at the end of September and into October.

This week's rebound has been quite impressive, with the SPX moving from 20 percent below its 10-day moving average to 20 percent above it in just the last two sessions. Support is at 1420, while resistance is at 1475.

The Nasdaq 100 was up 3.21 percent on the day, gaining 85.54 points to close at 2746.47. Despite that surge, the NDX is just back to where it was in mid-October and still more than 130 points below its September high. Support is at 2670 and resistance at 2785.

The Russell 2000 gained 24.07 points, or 2.83 percent, to finish at 873.42. That is a new all-time high for the small-cap index, which now has support at 850.

The broad rally action pushed the VIX down 3.34 points, or 18.53 percent, to 14.68. That is the lowest close since Oct. 5, while Friday's high above 23 was the highest since June. The move is being reported as the largest two-day drop in VIX history.

The January VIX futures followed the spot index lower, but to a lesser degree, bringing the futures back into solid contango. Those futures fell 2.15 points to finish trading at 15.55, while the February futures were down 1.75 points to 16.75.

More than 947,000 VIX options traded on the day, with calls just outpacing puts. It was one of the largest daily put volumes the VIX has ever seen.

The iPath S&P 500 VIX Short-Term Futures ETN (:VXX) saw more than 454,000 options change hands, led by 295,000 puts as traders played the downside in the VIX futures. The VVIX Index, which measures the implied volatility of the VIX options, was down 14.8 percent to a low of 78.77.

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